Unless you’ve been living under a rock, you know student loan debt is a major crisis in this country. 44 million Americans hold as much as $1.53 trillion worth of debt. For many of those who are struggling, this debt is preventing them from having a normal life. This is why student loan forgiveness is a popular idea. Especially if you lean to the left.
People are struggling with their debt. There’s no hiding that fact. Yet, debate continues to rage on about the right way to handle the problem. The Obama administration was the first to sign a comprehensive student loan forgiveness bill. Under this new law, public service workers and those who were defrauded can get their loans wiped off the books.
Of course, the details vary. But is student loan forgiveness a progressive idea? Should the government broadly give everyone a clean slate? The answer isn’t clear. The Trump administration disagrees with Obama. In fact, they’re in the process of being sued for not following forgiveness protocols.
Education Secretary Betsy DeVos thinks student loan forgiveness should be offered based upon a person’s income. At first glance, this might seem like a selfish plan. But David Leonhardt of the New York Times actually agrees. The progressives want a free college education, but Leonhardt thinks that’s a regressive idea.
Does Everyone Need Student Loan Forgiveness?
The big question is, who holds the most debt? It’s not poor college students, despite what many want you to believe. The largest portion of student loan debt is held by the highest-earning 25% of households in the U.S. A quarter of all debt is owed by the top 10% wealthiest families. The more expensive loans are taken out by those pursuing a graduate degree.
What does this all mean? The data shows that most of the debt is being taken out by people pursuing a high-end degree. Most of these people turn out to be lawyers, doctors, have MBAs, or get a job working as a Google engineer. Are these careers the most deserving for student loan forgiveness?
This is the point DeVos and the Trump administration is trying to make. Those with the highest amounts of debt have top-end degrees with high-paying salaries. This doesn’t discount the fact that millions of young people graduate college with crushing debt. The whole education system from the top down is a complete disaster.
Here are two potential solutions that would work as a compromise:
1) Forgive the Cheated
One of the reasons why student loan debt rose to such a catastrophe during the Great Recession had to do with shady for-profit schools. Jobs were scarce and people were desperate for a way out of the recession. Many schools, like ITT Tech and Corinthian, lied about their job placement rates.
They lied to convince the desperate to shell out for their ultra-expensive classes. Of course, there was a recession going on, so all it took to get a good job was take out a student loan. Once they graduated, they realized quickly job placement was a sham. Now, they have a ton of student loan debt and no job to pay it back.
So, the one way the government can help is by holding this schools accountable. They should also stop fighting student loan forgiveness for the cheated. It’s the only fair way to get the ball rolling and protect the lower classes who can’t afford to go into default.
2) Forgive a Flat Rate
Here’s the good news: the government has a lot to benefit from by helping with student loan forgiveness. Having a large amount of debt slows the economy. It prevents young people from buying a home, paying their bills, starting a family. Many put off marriage and other major life decisions.
Rather than expecting the taxpayers to shell out for free college, maybe offering a flat rate will help. For example, say the government offers $10,000-$20,000 off their loans. For many, this would be a lifesaver. It would allow those in the lower class to go to college essentially free. Those going for a graduate degree get some help.
Student loan forgiveness can be a complicated process, but it doesn’t have to be. Either way, the government needs to step in an offer help to those who need it.